In the recent case of Fitzgerald v. The Chateau Restaurant Corp., No. 14-01990-J, 2016 WL 344155 (Mass. Sup. Ct. Jan. 4, 2016), a former manager at The Chateau Burlington and The Chateau Andover restaurants filed a putative class action against parent company The Chateau Restaurant Corporation, Inc. and several related corporations which owned individual Chateau restaurants in the Massachusetts Italian restaurant chain. In his complaint, the Plaintiff alleged that he was routinely denied the opportunity to take his off-site meal break--because of a company policy that if only one manager was on site, that manager could not leave the restaurant--yet he still had his pay automatically deducted to account for such a thirty-minute meal break. Id. at *1-2. Fitzgerald filed a putative class action on behalf of himself and other similarly situated hourly managers at any Chateau restaurant location during the six-year period preceding the commencement of the action, alleging violation of the Massachusetts Wage Act, violation of the Massachusetts Overtime Act, breach of contract and unjust enrichment. Id.
Defendants moved to dismiss all of the claims, arguing that the Plaintiff failed to establish the existence of an employment relationship between the members of the putative class and the Defendants because separate Defendant corporations operated the individual restaurants. Id. at *2. The Plaintiff countered that the complaint adequately asserted an employment relationship through a single integrated employer or joint employment theory. Id.
The Court agreed with the Plaintiff's position and denied the motion to dismiss, finding that "from the factual allegations provided in the complaint, it is reasonable to infer that Chateau Corp. and the Sister Corporations are integrated with one another to the degree that liability may be imposed upon these parties alongside the other defendants." Id. at *4.
The Court opened its analysis by noting that state courts had evaluated the joint employment theory and the single integrated employer theory under Fair Labor Standards Act cases, and there was one federal case--Joyce v. Upper Crust, LLC, 2012 Dist. LEXIS 103101 (D. Mass. July 25, 2012)--which applied the joint employer theory to the Massachusetts Wage Act. Id. at *3.
The Court noted that four factors are used to assess whether nominally separate companies may be so intertwined as to constitute a single employer: "(1) interrelation of operations; (2) common management; (3) centralized control of labor relations; and (4) common ownership." Id. at *2, citing Romano v. U-Haul Int'l, 233 F. 3d 655, 662 (1st Cir. 2000). The Court recounted the allegations in the complaint that individual defendant Joseph Nocera was the president and treasurer of the parent corporation and all of the additional corporations, that the corporations were all incorporated in Massachusetts with a principal office located at the same address, and that all of the Chateau restaurants maintained the same practice of deducting managers' pay for a thirty minute meal break regardless of whether the managers actually took such a break during a particular shift. Id. at *4. Under these facts, the Court held there was a "basis for a reasonable inference that there is common management and common ownership" of the corporations, and, therefore, that the Plaintiff "sufficiently pled facts to establish that the Chateau Corp. and all the Chateau corporations are a single employer for purposes of the Massachusetts Wage Act." Id. at *4.
The ruling in Fitzgerald may make it easier for plaintiffs to maintain class actions under state law against interrelated corporations. Fitch Law Partners LLP will continue to monitor future litigation in this developing area of the law.